Horse racing-mad Dubai has emerged as the saviour of Channel 4's racing coverage after a firm owned by the Dubai government began exclusive negotiations for a two-year £4m sponsorship deal.

Dubai Holding, which owns and controls companies including Tussauds Group, Travelodge and the "seven-star" sail-shaped Burj Al Arab hotel, is discussing a deal that covers 80 days a year of Channel 4 terrestrial horse racing coverage.

Last month Andrew Thompson, Channel 4's head of sport, warned that the show's live coverage of racing would end unless a new sponsor was found.

Totesport pulled out after just 12 months of a proposed three-year contract after changes to the Gambling Act enabled bookmakers to advertise during sports broadcasts.

Dubai Holding is a company that belongs to the government of Dubai. The ruler of the emirate, Sheikh Mohammed bin Rashid Al Maktoum, controls almost all of the company.

It in turn controls a range of companies in areas including private equity, real estate, media and finance.

Through various subsidiaries and operating companies Dubai Holding also controls Arab Media Group, which owns the Arabian Broadcasting Network and the Emirates Today, Al Bayan and Emiarat Al-Youm newspapers.

Companies including Betfair and Satellite Information Services had been tipped as front runners to take over the Channel 4 horseracing sponsorship.

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